5 facts about India's growing two-wheeler market

According to SIAM, the Indian two-wheeler market is expected to double every four years till 2020.

NDTV Correspondent | Last Updated: June 05, 2012 15:14 (IST)

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As growth slows and expectations of rate cuts rise, Aditya Puri, managing director of HDFC Bank, says that while some room for rate easing has opened up, any dramatic reduction in rates is unlikely.

New Delhi:

Two-wheeler company Hero MotoCorp on Monday said its first bike without the technology of erstwhile partner Honda will hit the market by 2014.

The bike could be developed in India or anywhere but it would be on a completely new platform, managing director and CEO Pawan Munjal said.

The company continues to use Honda technology for its products after the break-up of their joint venture, Hero Honda. It has a licence agreement with the Japanese firm till 2014. The joint venture ended in December 2010.

Here are five things to know about the Indian two-wheeler industry:

According to industry body, the Society of Indian Automobile Manufacturers, the Indian two-wheeler industry is expected to post an annual growth of 11-12 per cent, and the market is expected to double every four years till 2020. According to data from Nomura and Crisil, as many as 10 million two-wheelers were sold in India 2011-12. Vehicles in the executive segment formed the bulk of sales at 6.5 million, followed by the economy segment (1.8 million) and premium segment (1.7 million).

The recent series of hikes in the price of petrol have played a significant role in the sale of two-wheelers, according to SIAM, as most first-time four-wheeler buyers in rural India and tier II and tier III cities have deferred their purchases. Two-wheelers account for a whopping 76 per cent of market share in the automobile sector in Asia’s third-largest economy. Passenger vehicles account for 16.25 per cent.

Barely 18 months after India’s most successful two-wheeler marriage ended, Honda made its ambitions clear by launching the 110cc Dream Yuga, its first low-cost motorcycle meant to target the budget market ruled by Hero and Bajaj. The Dream Yuga comes at an attractive Rs 44,642, and will compete with Hero’s Splendor, which costs Rs 42,950. The Splendor is India’s top-selling bike.

Other two-wheeler companies such as Yamaha and Suzuki, too, are steadily focusing on the mass-market segment in an attempt to dislodge the two giants—Hero and Bajaj. Yamaha last month announced a new $280 million factory in India to nearly triple its capacity to 2.8 million motorcycles by 2018, while Suzuki Motor, which is expected to launch a mass-market offering soon, is building a new factory to take its India capacity to close to one million motorcycles by 2014.

Hero has a market share of around 56 per cent in the overall domestic two-wheeler market. At 25.5 per cent, Bajaj comes a distant second, but maintains a healthy lead over Honda and TVS, which have 7.5 per cent and 6.2 per cent market share, respectively. In terms of volume growth over the previous fiscal year, Hero leads with 16.5 per cent, followed by Honda (13.6 per cent), Bajaj (7.4 per cent) and TVS Motors (minus 0.3 per cent). Top brands from each stable are as follows: Hero – Passion, Splendor and Pleasure (scooter); Bajaj – Pulsar and Discover; Honda – Unicorn, Twister and Activa (scooter); TVS – Flame, Apache and Scooty (scooter).